Canadian dollars
Aug. 15 (Bloomberg) -- Canada’s dollar climbed to the highest level since May versus its U.S. counterpart, trading stronger than parity for a ninth day, amid speculation North American economic growth will sustain the nation’s exports.
The currency has gained versus the majority of its 16 most- traded peers this month as data showed jobs and retail sales in the U.S., Canada’s biggest trade partner, rose more than forecast. The euro has fallen versus the Canadian and U.S. dollars amid concern European leaders are struggling to resolve their debt crisis. U.S. industrial production gained more than forecast in July, a report showed today, and commodities rose.
“Canada is still seen as a safe place to park money on a relative basis these days,” Shane Enright, executive director at Canadian Imperial Bank of Commerce’s CIBC World Markets unit in Toronto, said in a telephone interview. “The U.S. industrial production number came in slightly better than expected; that was a little bit Canada-supportive.”
The Canadian currency, nicknamed the loonie for the image of the waterfowl on the C$1 coin, appreciated 0.3 percent to 98.89 cents per U.S. dollar at 12:29 p.m. in Toronto. It touched 98.88 cents, the strongest since May 4. One Canadian dollar buys $1.0112. The two currencies reached a one-for-one basis on Aug. 3 for the first time since May.
Standard & Poor’s GSCI index of raw materials increased 0.5 percent, and crude oil for September delivery traded at $93.66 a barrel in New York. It touched $94.72 on Aug. 8, the highest since May 15. Raw materials including oil account for about half of Canada’s export revenue, and crude is its biggest export.
Bonds Fall
Government bonds fell for a third day, pushing yields on the 10-year benchmark security up eight basis points, or 0.08 percentage point, to 1.94. It was the highest level since May 22. The price of the 2.75 percent notes maturing in June 2022 slid 75 cents to C$107.22.
Canada auctioned C$3.4 billion ($3.44 billion) of five-year debt today, attracting C$8.8 billion in bids and drawing an average yield of 1.538 percent. The securities carry a 1.5 percent coupon and mature in September 2017.
The loonie extended gains after Federal Reserve data showed U.S. industrial production increased 0.6 percent in July, after a revised 0.1 percent gain in June that was smaller than previously reported. Economists in a Bloomberg News survey forecast a 0.5 percent rise. Manufacturing, which makes up about 75 percent of total production, advanced 0.5 percent for a second month.
Canadian factory sales rose in June for the first time in three months, economists in a Bloomberg News survey forecast before Statistics Canada reports the data tomorrow. Manufacturing sales increased 0.3 percent, after a 0.4 percent drop in May, they projected.
The loonie has traded below its 50-, 100- and 200-day moving averages since July 26 as it strengthened beyond parity with its U.S. counterpart. The Canadian dollar has been as strong this year as 98 cents to the greenback on April 27 and as weak as C$1.0447 on June 4.
“We feel quite comfortable here close to parity,” Camilla Sutton, chief currency strategist at Bank of Nova Scotia’s Scotiabank unit in Toronto, said in a phone interview.
The U.S. currency gained earlier versus most major peers after Goldman Sachs Group Inc. said in a report yesterday the Fed will delay a third round of bond-buying, known as quantitative easing.
U.S. Sales
U.S. retail sales advanced 0.8 percent in July, data showed yesterday, the biggest jump since February and first gain in four months, the Commerce Department said yesterday. American employers added 163,000 jobs last month, the government said Aug. 3, compared to a 64,000 increase in June.
The loonie remained higher today even after a report showed the cost of living in the U.S. remained little changed in July and a factory gauge of the New York region unexpectedly fell.
The U.S. consumer price index reading capped a 1.4 percent gain over the past 12 months, the smallest year-to-year increase since November 2010, the Labor Department reported today in Washington. The Fed Bank of New York’s general economic index dropped to minus 5.9 this month, from 7.4 in July. The median estimate in a Bloomberg survey was 7.0. Negative readings signal contraction.
“As long as CPI is fairly soft, as long as the data does not continue to surprise on the upside as it has, then it leaves the door open to the potential for QE3,” Scotiabank’s Sutton said.
The U.S. central bank bought $2.3 trillion of assets in two rounds of quantitative easing between December 2008 and June 2011 to spur the economy.
